Why cybersecurity is a strategic issue
Is your business one hack away from disaster?
By Syed Ali, Vishy Padmanabhan and Jim Dixon
Syed Ali is a principal with Bain & Company in Chicago. Vishy Padmanabhan
is a partner with Bain & Company in Dallas. Jim Dixon is a partner in Bain’s
Palo Alto office. All three work with Bain’s Global Information Technology practice.
Copyright © 2014 Bain & Company, Inc. All rights reserved.
Why cybersecurity is a strategic issue
When you think of the billions of dollars organizations
spend to protect their digital assets, it’s amazing that
hardly a week goes by without news of a major security
breach. We see not only more attacks, but larger, more
complex and targeted incursions on organizations for
financial gain (see Figure 1). Some enterprises face
advanced persistent threats (APTs), a highly sophisticated
form of malware that permeates the organization, mutates
into variants, remains innocuous and undetected for a
long time, and stealthily accesses and transmits corporate
assets. The sought-after digital assets include intellectual property (IP), trade secrets, and customer and
financial data (see Figure 2).
organizations can be devastating in terms of lost revenue,
impugned reputations and financial repercussions.
For example, an October 2013 attack on Adobe resulted
in the theft of customer data from 38 million accounts
and of valuable source code behind some of Adobe’s
most widely used products, including Reader, PhotoShop and ColdFusion.
Only two months later, in December 2013, Target Corporation confirmed that it suffered a massive security
breach resulting in the loss of credit and debit card data
on 40 million customers over a 19-day period. The data
may have been harvested by malware affecting physical
point-of-sale systems at nearly 2,000 Target stores.
Organizations are having a tougher time mitigating
security breaches, and the average financial impact of
each breach on an organization is increasing (see
Figure 3). What’s more, it’s becoming harder to keep
these attacks out of the news. Often, clients or regulatory
agencies require companies to disclose breaches; in
other cases, attackers themselves distribute the pilfered
information online. In many cases, the consequences for
The immediate consequences for a company dealing
with a customer data breach are severe and may include
negative press, sales and stock price decline (at least
immediately after the breach), the threat of lawsuits
from customers and partners, and long legal investigations. When attackers gain access to the source code
Figure 1: Deeper and broader security vulnerabilities seem to correlate with more attacks and malware
Increasing rate of newly reported vulnerabilities,
especially in mobile platforms…
…seems to be correlated with a higher rate of attacks
and exponential growth in malware
Daily Web attacks blocked
New vulnerabilities across all platforms
+27%
+30%
5.3K
10%
4.2K
6%
190.4K
57%
Low severity
44%
33%
Medium
severity
High severity
2011
2012
50%
2011
315
52%
29%
+30,335%
415
350.0K
14%
41%
45%
19%
2011
2012
Cumulative volume of Android malware
New vulnerabilities in mobile platforms
+32%
247.4K
Other
iOS
1.2K
Android
2012
2011
Sources: MITRE CVE; Symantec; Trend Micro; Bain analysis
1
2012
Why cybersecurity is a strategic issue
Figure 2: Most attacks come from outsiders looking for financial gain
An increasing number of organizations
are being targeted directly…
…with financial gain as
the primary motivation…
…resulting in the loss of sensitive data
that can easily be monetized
1%
+51%
2%
2%
3%
6%
3%
Other
corporate
information
94%
116
82
94%
Personal
grudge
Hactivism
Corporate
trade
secrets
and IP
Financial
gain
Customer
records
Curiosity or
pride
2011
2012
Targeted assets
Motivation
Sources: Symantec; Verizon 2011 investigations; Trustwave; Bain analysis
Figure 3: Security breaches are becoming more difficult and expensive to detect and mitigate
Organizations are having a harder time detecting
and resolving security breaches…
…and the average financial impact of each breach
on an organization is increasing
+22%
+6%
234
$9M
$8M
24
192
18
210
174
Average days
to resolve
Average days
to detect
2011
2012
2011
Sources: Trustwave; Ponemon Institute; Bain analysis
2
Protected
health
information
(PHI)
2012
Why cybersecurity is a strategic issue
of software products, they can find and exploit new
vulnerabilities (so-called zero-day attacks) that could
affect corporate and customer systems, data and devices.
with suppliers and partners; and other data. The security
around these assets varies greatly depending upon the
perceived (as opposed to the actual) financial and strategic
value to the business, as well as the effectiveness of the
security technologies and processes in place.
With stakes so high, CEOs and boards must begin to
think about security in a new way. IT security—a task
that could once be delegated to the IT staff—has become
a top-level strategic issue because the consequences of
failure can ruin a business. Any organization may be
only a few hacks away from disaster.
What’s more, organizations are shifting to hybrid cloud
architectures as they continue to adopt software, security
and other solutions as services (SaaS, SECaaS and so on).
Historically, digital assets were protected within the
company’s data center, where it was easier to guard the
perimeter and manage user access, authorization and
authentication from known locations and devices. Today,
corporate and customer data resides in the organization’s
own data centers as well as public and private clouds,
distributed across remote locations. While hybrid cloud
architectures offer significant economic benefits, their
adoption requires a more sophisticated approach to
cybersecurity, including security management at the
level of individual digital assets and integrated monitoring and management capabilities across the hybrid
cloud environment.
And yet, every organization that found itself on the wrong
end of a security breach already had some form of cybersecurity in place. The names in recent headlines include
banks, technology and media companies, retailers,
research universities as well as security agencies—none
of which are new to the game of protecting information.
So how is it that they found themselves ill-equipped to
deal with the rising tide of threats?
In our experience working with many leading enterprises on this important and sensitive issue, we see too
many organizations that fail to align their IT security
capabilities with their larger goals and appetite for risk.
At some companies, business and IT don’t discuss
emerging threats or the relative importance of different
classes of digital assets. Not surprisingly, we frequently see
disconnects between an organization’s risk-management
efforts and the development of necessary cybersecurity
capabilities. And too often, we see fits and starts, as
teams take an inconsistent approach to security planning,
operations and funding. Taken together, these mistakes
create gaps in strategy and operations that leave the
organization vulnerable. New challenges for cybersecurity
Further complicating the challenge is the pervasive use
of mobile devices by staff and executives. Corporate IT
now has to manage the security of many more platforms
and devices, some owned by the company and others
that belong to employees who use them under bringyour-own-device (BYOD) plans. A recent survey by ISACA1
found that up to 66% of organizations will soon adopt
BYOD policies, yet half of IT staff members remain
concerned about the inherent security risks. To manage
these policies effectively, IT organizations will need to
provide ubiquitous security across many devices and
comprehensively manage user identity and access to
sensitive corporate data.
Cybersecurity has never been more essential, for at
least four major reasons. First, companies have more
digital assets than they did 10 years ago, and these assets
are worth more than they were before. They include customers’ personal, financial and transaction information;
proprietary assets, including source code for products;
automated business processes; sensitive communications
Finally, compliance remains the most important cybersecurity driver, especially for companies in regulated
industries or with contractual obligations. In a recent
Bain survey, more than 75% of CIOs identified compliance requirements as the main determinant of investment in IT security. Another recent survey of IT staff
by ISACA found that outside of compliance obligations,
3
Why cybersecurity is a strategic issue
IT has insufficient resources and limited business
engagement for effective risk management.2 These findings highlight the operational approach to cybersecurity
taken by many organizations. Compliance should
define the lower bound for security capabilities while
the upper bound should aspire to meet the organization’s strategic priorities, including IP protection, continuous operations and a secure corporate reputation.
•
Identify the security risks and gaps. Assess current
security capabilities and determine the likelihood of
experiencing known and emerging risks. Business
and IT leaders should then align on the gaps and
the estimated mitigation costs.
•
Define the cybersecurity strategy. Based on a thorough
understanding of the organization’s security priorities and gaps, IT should create comprehensive
technology, process and organizational designs and
blueprints with strategic and operational elements
that protect digital assets (see Figure 4).
•
Emphasize gaps, priorities and strategy to the CEO and
board. Leadership should know about the securityrelated risks and gaps they face, so they can understand
the importance of the investments required.
•
Engage recognized security specialists. As the threat
landscape expands and attacks become more sophisticated, organizations should work closely with
firms that can provide ongoing services to diagnose,
redesign and monitor their cybersecurity.
Protecting your data, reputation and business
Leading organizations take a more strategic rather than
an operational approach to security to respond to the
new challenges.
•
Understand the organization’s key assets and appetite
for risk. Align business and IT leaders on the prioritization of digital assets based on value and risk
to the organization to ensure the proper design of
technology, processes and supporting resources.
For example, customer data, point-of-sale and order
management systems are a higher priority while
marketing and promotion systems may be lower.
Strategic
Figure 4: Bain’s approach to cybersecurity aligns strategic imperatives with the necessary operational capabilities
Business alignment
• Does IT understand the organization’s security needs and its appetite for risk?
• Are senior leaders involved?
IT risk management
• How is risk proactively gauged and managed?
• Who aligns risk mitigation with IT policies?
Administration
Operational
Architecture and engineering
Monitoring and operations
Physical security
• Does IT have an accountable and empowered chief information security officer and team?
• Does IT have funding for the necessary security capabilities?
• Does the strategic security plan and solution design reflect standards and
best practices for dealing with current and emerging threats?
• Is security applied at the digital asset level?
• Is security equipped to identify and make a coordinated response to threats?
• Is there ongoing user training on security practices and threat awareness?
• Are there integrated monitoring capabilities across the hybrid cloud environment?
• Are data centers and other facilities as secure as virtual assets?
• Are user devices encrypted and enabled for remote security management?
Source: Bain & Company
1 ISACA: 2013 IT Risk/Reward Barometer – Global Results
2 ISACA: 2012 Study on Application Security
4
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Key contacts in Bain’s Global Information Technology practice:
Americas: Syed Ali in Chicago (syed.ali@bain.com)
Steve Berez in Boston (steve.berez@bain.com)
Vishy Padmanabhan in Dallas (vishy.padmanabhan@bain.com)
Rudy Puryear in Chicago (rudy.puryear@bain.com)
Jean-Claude Ramirez in São Paulo (jean-claude.ramirez@bain.com)
Jonathan Stern in San Francisco (jonathan.stern@bain.com)
Rasmus Wegener in Atlanta (rasmus.wegener@bain.com)
Asia-Pacific: Arpan Sheth in Mumbai (arpan.sheth@bain.com)
Peter Stumbles in Sydney (peter.stumbles@bain.com)
Europe, Middle East
and Africa:
Thomas Gumsheimer in Frankfurt (thomas.gumsheimer@bain.com)
Marc Lino in Amsterdam (marc.lino@bain.com)
Stephen Phillips in London (stephen.phillips@bain.com)
Sachin Shah in London (sachin.shah@bain.com)
For more information, visit www.bain.com